Student Name: Lee Cheuk Fung Jerff Student ID No. : LE0002110 Course No. : MGT 195 Course Name : Business Policy and Strategy Title of the Assignment: Strategic Planning at The Chronicle Gazette Date of submission: 8 DEC 2011 TABLE OF CONTENTS 1. Introduction 3 2. State of the newspaper publishing industry today 2. 1Data on Circulation and Revenue 4-6 2. 2 Top 20 U. S. Newspapers Print Circulation 7-8 3 Why newspapers are facing declining circulations and revenues? 3. 1 External Assessment . 11 Rise of the Web , Internet and free information 9 3. 12 Economic downturn put company into the trouble 9 3 Internal Assessment of The Chronicle Gazette 4. 13 Strengths 10 4. 14 Weaknesses 10 4 Strategies in publishing industry to cope with the Challenges 11,12 5 Steps to deal with the challenge 13 6. 1 Short-term steps 6. 2 Long-term steps Strategic Planning at The Chronicle Gazette 1. Introduction
The Chronicle Gazette is a leading newspaper in the United States with a circulation of 225,000 customers. Over the past few years, it has been facing a decline in its customer base and revenues. This is mainly due to the increasing dominance of the Internet as a means of disseminating information and news. Susan Feinman, the publisher of The Chronicle Gazette, noted the criticalness of the problem and worried this will become the 21st century equivalent of buggy whip manufacturers. The company is not looking for band-aid solutions but an insight of all the challenges and to work out an effective business strategy.
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As The Chronicle Gazette has been a steady decline in subscriptions and revenues, this report will present the strategic vision of where the newspaper publishing industry stands today and where it is headed over the next decade. 3. State of the newspaper publishing industry today The U. S. newspaper industry is in the midst of a historic restructuring, buffeted by a deep recession that is battering crucial advertising revenues, long-term structural challenges as readership to free news and entertainment on the Internet, and heavy debt burdens weighing down some major media companies. As the distress mounts – seven U.
S. newspaper companies have filed for bankruptcy in the past years – lawmakers are debating possible legislation to assist the industry. Additionally, the Federal Trade Commission (FTC) will hold a series of workshops in 2009 to look at challenges facing newspapers, television, and radio in the Internet age. There are now about 1,400 daily newspapers in the United States and thousands of community papers, which generally publish weekly or biweekly. A handful of papers, including the Wall Street Journal, USA TODAY, and the New York Times, have a national print readership topping a million or more.
The top 50 papers account for about a third of circulation, among them the big city papers that had some of the largest circulation declines in 2008. Overall, the newspaper industry, including printers, reporters, advertising salespeople and other personnel, was a roughly $50 billion business in 2002, according to Census Bureau data, employing about 400,000 people. Over the past few years, there has been a steady decline in the readership of newspapers. Anincreasing number of people are using the Internet to read and view news online for free.
Due tothe advancements in Internet, people have free access to news and information online twentyfour hours a day and seven days a week. The news content is available in real time and can beaccessed anytime anywhere in the world. The majority of these online news providers do not levy a fee. As a result, the number of readers willing to pay for news content is reducing and this has a direct impact on the sales of newspapers. 2. 1Data on Circulation and Revenue The following tables and data demonstrating the decline of print circulation and revenue of the newspaper industry A) U. S. Newspapers Circulation in the last decade U. S. Newspapers Circulation forecast Starting decline from the early 90’s (B) Top 20 U. S. Newspapers Print Circulation (Six-Month Period Ending in March 2009) Daily PrintSix Months NewspaperCirculationEnding Mar 2009 USA TODAY 2,113,725 -7. 46% The Wall Street Journal 2,082,189 0. 61% The New York Times 1,039,031-3. 55% Los Angeles Times 723,181 -6. 55% The Washington Post 665,383 -1. 16% New York Daily News 602,857 -14. 26% New York Post 558,140 -20. 55% Chicago Tribune 501,202 -7. 47%
Houston Chronicle 425,138 -13. 96% The Arizona Republic 389,701 -5. 72% The Denver Post 371,728 NA Newsday 368,194 -3. 01% The Dallas Morning News 331,907 -9. 88% Minneapolis Star-Tribune 320,076 -0. 71% Chicago Sun-Times 312,141 -0. 04% San Francisco Chronicle 312,118 -15. 72% The Boston Globe 302,638 -13. 68% Cleveland Plain Dealer 291,630 -11. 70% Detroit Free Press 290,730 -5. 90% The Philadelphia Inquirer 288,298 -13. 72% Source: Nielsen Online and Editor ; Publisher. (C) Newspapers Advertising Revenue (D) Top 25 U. S. Newspapers Circulations As of mar 2011 Why newspapers are facing declining circulations and revenues? 4. 2 External Assessment 3. 11 Rise of the Web , Internet and free information The key challenge of traditional newspaper are too much free information from everywhere, internet , web, free newspaper and app. People can know all the things though the forum of a website. And the development of iphone , ipad, and smartsphone let the electronic reading grow fast. Print circulation for daily papers fell by 13. 5% from 2001 to 2008, and 17. 3% for Sunday editions. Losses are mounting. Average daily newspaper print irculation fell 7% alone during the six-month period ending March 31, 2009, compared too the same period in 2008 As print circulation declines, online readership is soaring. U. S. newspaper websites averaged more than 73 million individual visitors a month in the first quarter of 2009, up 10. 5% from the same period in 2008. Newspapers are attracting online readers from well beyond their local communities including other cities and countries. Newspaper executives point to surging online readership as an endorsement of their product, saying public interest in news has increased, not diminished.
But readership trends are complex, as habits and preferences evolve in response to the enormous array of information available on the Internet, television, and through devices such as hand-held readers and cell phones. Though readers want news, they do not necessarily want it from a traditional paper, and are using multiple sources. For example, there is just one newspaper in the top five news websites. The biggest news websites, in descending order are : MSNBC Digital Network, CNN Digital Network, Yahoo! News, AOL News, and NYTimes. com. MSNBC had nearly twice the online audience of the New York Times.
Now is the technology era, television, radio and internet is more popular. The reader can more easily get some information and up to the minute news in them. They are the most threats to newspaper publishing industry. The Chronicle Gazette has the fixed supplier to furnish to the paper and printing inks, also long-term cooperation between us. Therefore, the bargaining power of suppliers is in medium-high level. Many competitors exist in the market. Also, the substitute products come out, such as Yahoo, MSNBC, Hotmail and 24-hours cable news, etc. In additional, they are free. The readers will towards them.
Therefore the bargaining power of customers is high. Other so-called aggregators run websites that mix links to newspapers’ stories with some original content, and bloggers frequently mingle newspaper and other reporting with their own commentary and insights. Increasingly individual stories are displayed on the Web as discrete products, separate from a broader newspaper. About 22% of readers who visited newspaper websites arrived indirectly, by first clicking onto online search engines like Google, with another big share arriving through the front page of Web portals like Yahoo or MSN, according to one analysis.
A separate 22% came from traffic moving between media and news websites, containing links to specific stories. Once readers arrive at newspaper websites, they spend less time there, on average, than print readers spend reading a traditional newspaper, though some studies show that time online has been increasing. Web readers spend an average of 53 minutes a week with newspapers – or just under eight minutes a day. It is also found, however, that 22% of readers had recently dropped a paid print newspaper or magazine subscription because they could get the paper free online. 3. 2 Economic downturn put company into the trouble The financial crisis in 2008 and the European debt problem let the newspaper industry is in trouble. Some large newspaper companies took on significant debt shortly before the economic downturn hit. Legacy costs are a complicating factor. Many newspapers have traditional, defined-benefit pension plans, which now appear underfunded due to large losses in market investments. It will have to make bigger cash contributions to its pension plans in coming years than previously expected, due to poor market returns and changes in pension law.
The company cautioned investors that “the contributions will place additional strain on the company’s liquidity needs. Investors have soured on newspapers. Some large newspaper companies saw their stock prices drop by more than 80% last year – far beyond the overall decline in the publishing industry and various stock indices. Newspaper stock prices rebounded a bit in 2009, but are still near historic lows. With revenues declining and their ability to raise new capital impaired, some newspaper companies are in danger of breaching financing agreements with their lenders.
If that happens, lenders could terminate lines of credit and call in existing loans. 3 Internal Assessment of The Chronicle Gazette 4. 1 Strengths * Good reputation on brand name for good quality * Accumulated significant market share * With experienced and professional workforce * Conservative corporate investment policy which had minimized lost during the economic recession * Top Managements all have the will to change and are ready for transformation 4. 2 Weaknesses Deficient in proactive action to the challenge of Internet and Web threats * Without a focus work team to nurture innovative ideas and develop new products * Inadequate of interaction with audiences in both online website and traditional print newspaper and so can have updated news. * Insufficient technology knowledge and experience in terms of people and equipments * A rigid hierarchy organizational structure which impede employees’ motivation to propose new ideas or changes 5. Strategies in publishing industry to cope with the Challenges
The newspaper industry in the United States is faced with multiple challenges of reducedreadership, increased costs and competition from new media companies, such as Google. Amajority of the newspapers have online versions of their editions on websites. They have alsoother measures to increase circulation and improve profitability. Newspapers have increased the prices for both the subscriptions and single buy purchase. They are also analyzing the markets they serve to understand the cost-benefit dynamic of each market.
As a result, some newspapers have cut back on circulation to remote areas where the revenues earned are more than the cost of delivery. The Wall Street Journal is one of the leading newspapers in the United States, which has changed its market strategy and business model to overcome the challenges in the publishing industry. Through its website, www. wsj. com, the paper provides online access of its news content to readers. As of April 2010, the Wall Street Journal had 414,025 e-subscriptions. Though the website is available online, not all of the content is free.
The Journal has formulated a mixed price strategy where it provides both free and paid content. The popular sections of the news content, such as politics, sports, arts and entertainment is free. Niche coverage such as editorials, opinions and articles on business and financial topics can be viewed only for a fee. Indepth coverage, analysis, opinions and reviews are available only to paid users(PricewaterhouseCoopers, 2010). By adopting this strategy of free and paid access, the WallStreet Journal has been able to increase its e-readership base. The free access to popular content attracts more traffic on its website.
This brings in more advertising revenues and increases profitability. At the same time, it helps in building a relationship with new readers. They are aware of the useful content available on wsj. com and are willing to pay for more in-depth coverage and analysis. Another important measure taken by the Wall Street Journal is embracing the digital revolution and becoming a part of it. The Wall Street Journal is available on Apple’s iPad. This move helps the Journal to widen its market and tap younger readers who are technologically savvy. As of June 2010, the Journal had sold more than 10,000 subscriptions and generated $2. million in revenues from the iPad (Business Insider, Inc. , 2010). There are companies at the other end of the spectrum in the newspaper industry who have adopted drastic measures to cope with the challenges. The Seattle Post-Intelligencer was facing significant losses for a few years. In 2008, the paper’s losses amounted to $14 million. As aresult, its owner The Hearst Corporation decided to shut down its print operations (GuardianNews and Media Limited, 2010). The Company had to make the hard decision of stopping publication of the 146-year old newspaper.
It stopped delivery to nearly 117,600 weekday readers (Hearst Seattle Media, LLC, 2010). In March 2009, the Seattle Post-Intelligencer rolled out its final print edition. It decided to publish only the online version, www. seattlepi. com of the paper. The paper reduced its staff headcount drastically from 165 to 20 (PricewaterhouseCoopers, 2010). Since the paper transformed into an entirely digital web format, its website, www. seattlepi. com, has had 4 million visitors per month with 40 million page views. With a reduced headcount, the website covers major topics, such as politics, sports and local happenings by itself.
It also sources stories through wire services and other news agencies. The website also makes use of 150 local bloggers for regional content (World Editors Forum, 2010). 6. Steps to deal with the challenge 7. 1. Short-term steps For the short-term, The Chronicle Gazette should study its organization structure and ensure that the human capital is being effectively used in the business. And it will publish the edition tabloid for free. And we will recruit the new employee have experience in technology, he will establish the E-newspaper and for future technology and internet issue. . 2. Long-term steps Adopt a multimedia mindset, viewing the business as a portfolio of products and services with different business models, pricing and distributions strategiesWe establish email and discussion area in our web-site for the reader offer the information. First of all, it is to attract much more reader to our platform. Second, we will know their favorite orientation in they provided the data. Third, it can increase the subject in our newspaper and E-newspaper by reader offered data.